At TWFG Insurance Services, we offer coverage to a variety of businesses. We help business owners all across Georgia and Alabama with their insurance needs. In the process of insuring lots of businesses and speaking with countless business owners, we have learned a lot about the relationship between business owners and their insurance agents. One practice that is pretty prevalent is a nasty little secret that most agents wouldn’t want their clients to know. That practice is blocking markets.
Here’s a situation that many times happens when a business owner calls our office asking us to help with his or her business insurance program. First, understand that while there are hundreds of insurance companies, only about five to seven at any time would be both strongly interested in writing insurance for any specific type of business and also ready to offer lower rates in order to induce a business to purchase from them. So while it may seem that there are endless options to choose from to insure your business, in fact for most business types, there are typically less than a dozen companies that hold any possibility for saving a specific business owner money. We are constantly monitoring the insurance companies to maintain access to as many competitive markets as possible for our prospective clients. In spite of this, many times we find that the agent who is currently insuring our prospective client has blocked one or more of these competitive markets so that we are unable to get a quote from them for that particular business. This means that the business owner stays with his or her current agent, all the while they never know that the current insurance agent has created a situation where they are unable to save money by using one of these blocked markets.
One might ask “how is this even possible?” Surely to heavens, the insurance company wanting to write new policies for new clients wouldn’t let one lone insurance agent take them out of the competition. Why would they do something so foolhardy? Well, to begin to understand why this happens, you have to understand that insurance companies make changes very slowly and carefully. Most of them are functioning on rules that may have been created 5 decades ago to solve a problem that may no longer exist. In short, almost all insurance companies have a senseless rule that says that if two agents want to quote their prices for the same exact client, then the first one to send in a quote request gets to control that account and no other agent can get a quote. With this foolish rule in place, there are agencies that game the system and regularly create partial quotes in all of their insurance companies’ quoting systems to block those markets for that particular client. This lets them continue to use an insurance company that may have less favorable rates or offers a better commission rate to the agent or maybe both.
The result is that the business owner, having placed all of their trust in their current agent, isn’t able to check pricing in the marketplace and they continue to be a client of that same agent who secretly kept them from getting a better deal.
So what do you do to stop this from happening? Well, if you choose to shop out your insurance policies for better pricing or better coverage but you still want your present agent to have a reasonable shot at keeping your business then you should ask him which companies he has quoted for you. Not just the one which has the best price, but ask to see all of the quotes. Additionally, if you have chosen a new agent to provide you with competitive quotes, ask him if any of his markets were blocked and if so by who. If your current agent is blocking those markets, ask him to show you those quotes and then run those by the competing agent to make sure that they are the best that the competing agent could do with those markets. Remember, business insurance pricing can very flexible and many times the insurance company offers agents the opportunity to apply additional credits to the rate at his or her discretion. Your current agent might show you a quote for one price on a blocked market but if the available credits weren’t taken, then the competing agent could have applied full credits and saved you even more money if that market were not blocked.